Obligations Regarding Our Overseas Factories

This past Tuesday I had the honour of being invited to testify before the Standing Committee on Foreign Affairs of Canada’s House of Commons. The hearing was part of a “study on corporate practices by companies supplying and manufacturing products in developing countries for Canadian consumers.” The discussion wasn’t specifically about the factory that collapsed in Bangladesh last month, but that sad event was certainly on everyone’s mind.

Other witnesses included representatives from the Retail Council of Canada (RCC), from Loblaw, from the Shareholder Association for Research and Education (SHARE), and from Gildan Activewear Inc.

Not surprisingly, a range of views were presented to the Committee. Strong government intervention? Solo efforts by individual companies? Collective action through groups like the RCC? Opinions differed on just how to proceed.

Equally unsurprising was that the witnesses were unified in their expression of deep sympathy for the people of Bangladesh. Everyone, as far as I could tell, was also in favour of improving working conditions in places like Bangladesh. Shareholders, for example, according to SHARE’s Peter Chapman, are and ought to be concerned about the “ESG” (ethics, social, & governance) obligations of the companies they invest in. Robert Chant — a senior VP at Loblaw, a company that commissioned clothing from one of the companies that worked out of the factory that collapsed in Bangladesh — said that while his company has always been concerned to monitor working conditions, they simply hadn’t thought to have their subcontractors’ buildings inspected. It wasn’t on their radar. And so the collapse in Bangladesh, said Chant, who showed genuine emotion during his testimony, “Shook us to the core,” and spurred his company to commit to doing better.

In my own testimony, I made 3 key points and 3 recommendations:

First, I noted that Canadian companies do indeed have ethical obligations that go beyond the legal minimum required by the governments of the countries in which they operate. Adherence to the law is seldom enough to guarantee that a company or individual has satisfied all relevant ethical obligations. This is of special significance in developing countries with underdeveloped legal and regulatory systems.

Second, I noted that we cannot expect companies operating in places like Bangladesh or China to adhere to Canadian labour standards. And perhaps no one expects that. Canadians generally enjoy high pay and high labour standards because we can afford to. Other countries, unfortunately, are not there yet.

Third, I asked what is the best way for Canadians to contribute to the well-being of those who work in factories in places like Bangladesh. I suggested three answers to this question. First, Canadians can continue buying things made in places like Bangladesh, because that is what gives a high proportion of Bangladeshis jobs. The second way to help is through charitable donations, both to humanitarian groups as well as to groups that are focused on issues like good governance and fighting corruption.

The third thing Canadians can do is to continue paying attention to this issue, and to continue encouraging Canadian institutions — businesses, governments, and NGOs — to keep working towards making things better. All have a role to play in encouraging and offering guidance on the pursuit of incremental improvements in working conditions in developing nations.

20 comments so far

You suggest that Canadian consumers, and everybody else who is well off, should continue to buy goods that are produced in sweatshop factories while believing that things will get better?

Unethical treatment of labor has been around before capitalism but it has always been a part of Capitalism. And so VPs saying that exploited labor in some far off land was always their concern but was only put on their radar because of some disaster is difficult to believe.

What we have to remember is that in some places where there is or has been exploited labor, jobs in some other sector, like agriculture, were destroyed first thus forcing people who worked in the destroyed sector to move. So benefitting from exploitation without doing anything more than wishing for and encouraging those who benefit the most to change doesn’t seem to provide a realistic solution. When one group benefits from exploitation, change has to be demanded of that group, along with changing one’s own habits that supports the exploitation, rather than merely encouraged.

Second, I take that your “yes” answer to the first part of my first question is related to your speculation that the people in Bangladesh would be worse off without Canadians buying those products. Though your statement is merely an assertion here, let’s assume that it is true. Wouldn’t the problem remain that your statement is too focussed on the here and now of Bangladesh to address long standing problems due to its history with the West?

In addition, if the claim of pre-collapse concern regarding the working conditions of those in Bangladesh is merely disingenuous, then wouldn’t Canadians be maintaining the status quo if they continue to buy products made in Bangladesh? And without leverage being exercised by Canadian consumers, how would we know whether that claim of concern is not disingenuous?

On the question of my assumption: I haven’t been to Bangladesh, but Mr Chant said — and I have no reason to doubt him — that when he was in Bangladesh just after the factory collapsed, the #1 message he got from various Bangladeshis was “please don’t pull out of our country.” Beyond that anecdote, it’s pretty simple math that if you pull business out of Bangladesh, people who are voluntarily taking those jobs will have fewer options. In some places, the alternative to a garment factory job isn’t some lovely white-collar job: it’s prostitution or working in a gravel quarry.

My focus is on finding reasonable ways to make people’s lives better. Regardless of Bangladesh’s history, it has a particular set of problems here and now. Less international trade is going to hurt, not help.

And I’m not sure which claim you’re saying is “merely disingenuous.” I don’t think anyone is being that.

Chris,
Do you understand why, in my first note, I said the focus is too much on the here and now. There is no regard for the past, despite the exploitation that took place, and whether we are continuing that exploitation.

At the same time, there is no hope for change in the future because what could possibly serve as an incentive for employers to treat their employees better?

Isn’t what you have said to the Canadian consumer that they must choose the lesser of two evils?

Nick
on
June 9, 2013

Companies really do need to be sure that their goods are produced under proper labor standards. Also, it brings up the question, instead of contracting production out to third parties in these countries, what if the companies actually making the products made them in the same country, but under their labor standards…just a thought!

I completely agree with your first main point of upholding a company’s expectation to go beyond the legal requirements of foreign governments and to have an ethical obligation to monitor where their products are made. It saddens me that this has not already been done, as well as surprises. I cannot see myself as a leader of any of those companies and worrying about where and how my products are made.

A point that I would like to make on top of yours is that it takes a TRADEGY such as Bangladesh I order to change people’s perspectives and to operate differently. Why does it always take a horrific event to take place before change is executed? I believe that it is an ethical responsibility of all to alleviate tragedies before they happen. By doing your best at work and throughout business, certain events and scenarios could be reduced or even prevented.

I think any country that utilizes foreign labor to manufacture product is ethically responsible for the safety and well-being of the workers. Cultural ethics allows people to be respectful of others and their culture but at the same time manufacturers should follow the same safety standards as they would in their own countries. In addition to making encouraging and offering guidance there should be a sharing of knowledge. For instance, companies should be required to build their own facilities using local companies and labor, but built with certain requirements that could be worked out with the authorities ahead of time. This would help guarantee safety protocols are established.

I agree with you that disrupting the economic flow after the disaster would only hurt the country more deeply and would ruffle what was, and still is, a vital relationship with the country depending on the trade.

You bring up something that I find very important in ethical standards for international trade. You mention incremental improvements in developing nations as a key focus for the future in your suggestions. Along with that, I believe the true understanding and care of another has to be present rather than the simple laws in place or slow steps to requiring conditions overseas that we would require in the United States or Canada. Understanding the “Other as Other” is pointed out by Charles Ess in his book, Digital Media Ethics. The theory is to bring the enlightenment to another’s culture, their beliefs, and fully understanding what it means to grow the mutual respect of another regardless of what country they are in. The alternative of this belief is the “Other as Target” which seeks to find a resource or market and exploit it to our own advantage without consideration for the other. Unfortunately we tend to see a lot of that when we discuss developing nations labor practices and the actions of Western companies in managing the ethical considerations of the manufacturing centers.

I believe each company has an ethical duty to see these manufacturing facilities as “Other as Other”. The appreciation and consideration given to another human being in their own culture has a tendency to make our actions more impactful on the basis of what we believe to be good, true, and beautiful.

Improvements in mutual concern would, in principle, be a lovely thing. Luckily, the market mechanism is able to make people better off even IF we have trouble bringing such mutual concern about. As long as transactions are voluntary, they are by definition mutually beneficial. (That’s what Adam Smith meant by “the invisible hand”.)

I don’t see why not. I have no reason to doubt the ethics or sincerity of the people who make the relevant decisions. They are doing their jobs in a way that makes the people of Bangladesh better off. It would be different if Bangladeshis were desperately trying to get rid of these Western companies. But they’re not. They LIKE Western companies, and see them as beneficial.

Chris,
The problem here is oversimplicity. You look at one factor and then come to an unsubstantiated conclusion. First, who said the people there needed the jobs more than the people here? What happens to the people and communities here when jobs are lost?

Second, so abusing labor doesn’t matter as long as they have job? Do manufacturers say to the labor there that you can’t complain regardless of how we treat you because at least you have a job?

Third, and what is happening to the environment when there are less regulations for manufacturers to abide by?

Fourth, was there another way to get jobs there without sacrificing jobs here? Why must we choose between one place xor another for jobs?

First: people whose other option is to sift through garbage mounds for scrap metal definitely, definitely need factory jobs more than almost anyone in Canada or the US does. And that’s the case for people in some developing nations.

Second: I never, ever said that abusing labour doesn’t matter. That would be a ridiculous thing to say.

Third: The environment is probably getting screwed there (by some industries) the same way it was here 100 years ago. For places like Bangladesh, it’s sad but probably-necessary tradeoff.

Fourth: There’s only so much demand in the world. A given manufacturing task is going to get done *somewhere*, not everywhere. It would of course be good to create employment in all places, but no one company can do that.

Chris,
First point, so your solution is to sacrifice the jobs in one location in order to keep them from sifting through garbage? Why not keep the original jobs and develop economies where people are shifting through garbage?

Second, when manufacturers often abuse labor, then silence is saying that it doesn’t matter.

Third, it isn’t a necessary tradeoff unless increasing profits for the company shifting the jobs is priority #1.

Fourth, no one company can do that. But then again, neither can any system that puts such an emphasis on individual profit.

Let’s face it. The jobs shifted overseas are not put there for the benefit of the people getting new jobs, they are there to increase the profits of those shifting the jobs. And for as long as a system is based on people just looking to maximize their own profits, we will have a great deal of abuse and abandonment to answer for.

He has been writing The Business Ethics Blog since November of 2005. The blog is now exclusively syndicated by Canadian Business magazine.

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